FAQs

The amount you can borrow for your home purchase is calculated by using your DTI (debt to income) Ratio.  In a perfect world you want to spend no more than 36% of your gross income on your house and other debt payments. However, we don't live in a perfect world so there are many loan programs that will allow you to spend a higher percentage by considering other factors like employment history, credit history, reserves (the cash you have left after the closing) and the amount of your down payment. The easiest thing to do is give us a call, in just a few minutes we can help determine exactly how much you can afford....and maybe more importantly how much you are comfortable spending.

**Special Note: generally daily living expenses like car insurance, cell phone, utility ,food bills are not used in the "other debts" calculation.

Consult a Professional - As part of the application process the questions we ask help us to discover the details of your personal and financial picture. This will allow us to structure several mortgage options that best suit your individual circumstances.  There is no correct "Plain Vanilla" answer and there really shouldn't be since you are an individual and not plain at all!  

No matter what, you will always need to spend some money when you are buying a home.  How much exactly?.....well that will require a deeper discussion. In general, the amount of cash you will need depends on a number of items.

1. The Type of Mortgage you get
2. Your Credit Score
3. Structure of the Purchase Contract 

Generally speaking, you will need to provide money from your own pocket for the below list of items:

• Earnest Money: This is a cash deposit given when you make an offer on a home. The Realtor or Attorney typically put it into a special account called an Escrow. It will be credited as part of your Down Payment later in the transaction. The amount ranges from $500 to $5,000.
• Home Inspection: Hiring a licensed Home Inspector will help ensure the "home of your dreams" is not actually the "nightmare of a lifetime". You are not required to perform a home inspection but it is the best way to protect yourself. Costs range from $350 to $1,500
• Appraisal: This is used to research the surrounding homes that have sold recently and verify the home is truly worth the price you have agreed to pay for it. An appraisal will be required as long as you are getting a mortgage.  Costs range from $450 to $800
• Down Payment: A percentage of the cost of the home that is due at settlement/closing.  The amount is relative to the loan product you select, or are eligible for, and ranges from 0% to 5% of the Purchase price, but you can always put down more if you want!
• Closing Costs: Costs include Lender charges, Attorney charges, Title costs, Recording and Conveyance costs, and Prepaid Items (Taxes, Insurance and Interest) due and payable at settlement/closing.  If I tell you how much these will be you may pass out so it would be best to call! **Special Note - we can always ask the seller to pay these for you if you are buying (sorry if it's a refi it's all you!)

It's fair to say that during the home buying process you will need a minimum of about $2,000 of available cash. Some or most of this could be retuned to you if properly structured financing can be approved.

For most homeowners, the monthly mortgage payments include three separate parts:

• Principal: Repayment on the amount borrowed for the actual cost of the home.  This is like paying yourself. The more Principal you pay back the more Equity you have in your home. Its like your savings account and each month it grows (as long as you make your payments!)
• Interest: The cost for borrowing the money
• Taxes & Insurances: Property Taxes, Home Owners Insurance and/or Private Mortgage Insurance (if necessary) amounts are collected from each monthly mortgage payment and deposited into what is called an Escrow Account.  This account will accumulate until a bill for one of these items is due, then the lender/mortgage servicer will make a payment using these monies . Basically, it's like having a personal assistant (YAY!!). For some loans an Escrow Account is optional.....but really who doesn't want their own personal assistant (even if they only pay two bills a month for you!

That is a crazy question and you won't believe me but the answer is ZERO (0). Don't get too excited, allow me to explain.  Getting a mortgage is a lot like walking around a maze but instead of only one exit there are many.  Sadly though, only certain doors will open based on your specific qualifications. Most people commonly think of FHA or Fannie Mae when they think of a mortgage but there are many other types.  Each one offering a different solution. 

There are four main parts to a mortgage qualification:

• Credit - not just your score but the content as well
• Collateral - the type and value of the property, title vesting, occupancy type
• Income - Debt Ratio (DTI), Source, Stability
• Assets - Down Payment and Reserves

The general idea is if one of these is not perfect, that's OK but if two or more is not perfect that will make getting a mortgage much harder.

The best thing to do is have a conversation with a Professional (that's us!) and if you don't like what you hear, always get a second opinion!  

Each lender may apply what are called Overlays.  These are additional or adjusted rules that are specific to that lender.  They do this because that particular company wants to limit risk or has a particular interest in a specific type of loan.  This is why a second opinion is always worth the time invested.